What does the budget mean for your business?

Posted on October 31, 2024 | by Katie Donno | Leave a Comment

After months of speculation, we finally have the details of the first budget from the new labour government. It appears most of the burden will be on business owners, ultra-high net worth individuals and investors, but thankfully not tiny business owners. Before discussing the changes and how they will affect you and your business affairs in detail, here are some thoughts.

It might feel unfair at the moment, and it might hurt financially, however it wasn’t as bad as the media said it was going to be. Over the past few years, you have gone through much tougher stuff with Covid and the cost-of-living crisis, and the resilience you built to help you through those will help you now.

If you are concerned, a good first step is to book a call with us to discuss the impact of this budget on your payroll, profitability, 2025 business plan and cash forecast and eventual exit plans for your business.

Let’s now go into details:

Your wage bill will go up:

On the 29th Oct the government announced the following changes to the National Minimum Wage which will apply from the 1st April 2025:

National Living Wage (21 and over): up by 77p to £12.21 per hour
18-20 Year Old Rate: up by £1.40 to £10.00 per hour
16-17 Year Old and Apprentice Rate: up by £1.15 to £7.55 per hour

This means if you employ someone to work 40 hours per week, on the National Living Wage their salary would be £25,396.80. Then you have National Insurance and pension costs on top of that. The increases are in line with the Low Pay Commission’s recommendations.

On top of the rise of the national minimum wage, the government announced changes to Employer National Insurance contributions. Not only are wages rising, but the amount of NI contributions employers pay is also increasing, and the point at which Employer Contributions are due has also decreased. Employer National Insurance Contributions now are set at 15% – up from 13.8%, with the threshold that businesses will now start paying for employees when their salary gets to £5,000 instead of the previous figure of £9,100.

However, the government has cushioned the impact of the increase in Employer National Insurance Contributions by increasing the Employment Allowance from £5,000 to £10,500. This means that most of the micro and small businesses could see a reduction in their Employee NI costs. For example, if your payroll monthly was £10,000 and every employee was above the salary threshold of £5000, then your NIC payments would reduce by over £3000 across the year. So, if you are one of these businesses, you could end up better off!

However, if you are a single director/shareholder company with no other employees, you are not eligible for Employment Allowance. This means that if you take a salary of £12,570 per month, your Employers’ NI contributions will go up in April from £39.90 to £94.63 per month.

Suggested Actions:

Review your wages: Figure out whose pay needs to go up in line with the national minimum wage and whose pay must also increase to remain fair, given the rise in the lowest-paid team members’ wage.
Review your costs and business model: Do you need to change how you resource your business? For example, is the balance of contractors vs permanent employees right? Would you be better off as a sole trader rather than trading via a limited company?
Review your operations to find efficiencies: How can your business use technology or slicker working practices to avoid hiring more permanent employees?
If in doubt, get in contact with us and we can help you to make a plan.

How will you pay yourself?

In years gone by, dividend tax credits made it far more efficient to pay directors a nominal amount via PAYE then the remainder via dividends. In this budget there was no announced change to basic, higher, or additional rates of income tax, employee NICs or dividend tax rates or credits for 25/26. Therefore basic rate income tax is still 20% vs dividend tax basic rate at 8.75%. Will paying yourself via PAYE or putting more aside into pensions be more tax-efficient in the short and long-term? With Capital Gains Tax rising, the tax you pay when selling your business has gone up which could mean less money in your bank account if or when or if you decide to sell your business.

Capital Gains Tax Increases with immediate effect:

It was predicted that Capital Gains Tax would go up in this budget, and while it did, it was not as much as feared.

Capital gains tax: lower rate increases from 10% to 18%
Capital gains tax: higher rate increases from 20 to 24%

Capital Gains Tax rates for Business Asset Disposal Relief (selling your business), and Investors’ Relief (investing in other businesses) will rise gradually to 14% from 6 April 2025 and match the main lower rate of 18% from 6 April 2026. This is to allow business owners time to adjust to the changes.

The lifetime limit for Investors’ Relief will be reduced to £1 million for all qualifying disposals made on or after 30 October 2024, matching the lifetime limit for Business Asset Disposal Relief. These new rates will match the residential property rates, which are not changing.

Going forward, this means that you are going to be more heavily taxed if you sell an asset or come into some money. Whether this means shares, business, property, inheritance, or something else. It also means that getting independent advice on your tax affairs is even more important now than ever. We can help you with this.

Inheritance tax:

The current inheritance tax thresholds are due to be frozen until April 2028, and the government is extending these threshold freezes for a further two years to April 2030.

The government is also removing the opportunity for individuals to use pensions as a vehicle for inheritance tax planning by bringing unspent pots into the scope of inheritance tax from April 2027.

The government will reform agricultural property relief and business property relief from April 2026. In addition to existing nil-rate bands and exemptions, the 100% rate of relief will continue for the first £1million of combined agricultural and business assets to help protect family farms and businesses and will be 50% thereafter. The government will also reduce the rate of business property relief to 50% in all circumstances for shares designated as “not listed” on the markets of a recognised stock exchange, such as AIM.

Business rates:

There is further help for the retail, hospitality, and leisure sectors. Businesses in these sector will enjoy the small business multiplier, which is the amount used to work out your business rates bill, being frozen at 49.9p. Then when the current 75% reduction in rates ends at the end of this tax year, a 40% reduction in business rates up to a £110k cash cap.

Driving and fuel costs:

The 5p temporary cut to fuel duty is being extended into the 25/26 tax year.

Company car tax rates have now been set for until 29/30. It’s still going to be much more tax efficient to have an electric car, but not as much as before.

Fully electric cars BIK % rises to 7% in 28/29. However, the hybrid car BIK in 28/29 rises to 18% and in line with the new company car BIK tax rates for petrol and diesel cars.

Zero emission cars will pay the lowest first year rate at £10 until 2029-30

Immediate changes to stamp duty:

Stamp duty is going up from 3% to 5% for those buying second homes, buy-to-let residential properties and companies purchasing residential properties. However, if the property is worth over £500,000 and being bought by a company then stamp duty will rise to 17% from 15%.

Non-domicile tax regime is being scrapped:

The government is removing the non-dom tax regime from the tax system and replacing it with a new residence-based regime from 6 April 2025.

Individuals who opt-in to the new regime will not pay UK tax on foreign income and gains (FIG) for the first four years of tax residence. From 6 April 2025 the government will introduce a new residence-based system for Inheritance Tax (IHT), ending the use of offshore trusts to shelter assets from IHT, and scrapping the planned 50% reduction in foreign income subject to tax in the first year of the new regime.

Overseas Workday Relief will be retained and reformed, with the relief extended to a four-year period and the need to keep the income offshore removed.

The government is extending the Temporary Repatriation Facility to three years, expanding the scope to offshore structures, and simplifying the mixed fund rules to encourage individuals to spend and invest their FIG in the UK.

For Capital Gains Tax purposes, current and past remittance basis users will be able to rebase personally held foreign assets to 5 April 2017 on a disposal where certain conditions are met.

These changes mean that it pays to get advice on your tax affairs if your income and capital gains come from both inside and outside of the UK. If this is you, please get in touch with us for a conversation with our Tax Manager.

Closing the tax gap:

The government is recruiting an additional 5,000 compliance staff and providing funding for 1,800 debt management staff. This will ensure more of the tax that is owed is paid and that more taxpayers pay outstanding tax due.The government is also investing in modernising IT and data systems to improve HMRC’s productivity and improve taxpayers’ experience of dealing with the tax system, delivering the modern and digital service businesses and individuals expect.

The government is also committed to taking stronger action on tax fraud, including by expanding HMRC’s criminal investigation work and legislating to prevent abuse in non-compliant umbrella companies.

As always, if you have any questions about how this will affect yourself and your business, get in touch with us and we can arrange a meeting to help you plan. Email Katie on katie@1accounts.co.uk or call us on 01440 844986.

Step-by-Step Guide to Starting a Business

Posted on August 2, 2024 | by Jade Donno

Step-by-Step Guide to Starting a Business

Starting a business can be both an exciting and daunting endeavour. With the right guidance, you can navigate the process smoothly and set up your business for success. This comprehensive step-by-step guide will help you understand the essential aspects of starting a business.

1. Research Your Market

Before you invest time and money into your business idea, it’s crucial to conduct thorough market research. Understand your target market, identify your competitors, and analyse demand for your product or service. This will help you refine your business concept and develop a strategy to stand out in the market.

2. Develop a Business Plan

A solid business plan is the foundation of a successful business. It should outline your business objectives, strategies, market analysis, financial projections, and operational plan. A well-thought-out business plan not only helps you stay organised but also attracts potential investors and lenders.

3. Choose a Business Structure

Selecting the right business structure is vital as it affects your legal responsibilities, taxes, and how you can raise capital. In the UK, the most common structures are:

Sole Trader: Simple to set up and gives you complete control, but you are personally liable for any debts.
Partnership: Involves two or more people sharing the profits, risks, and responsibilities.
Limited Company: A separate legal entity from its owners, offering limited liability but with more regulatory requirements.

4. Register Your Business

Once you’ve chosen your business structure, you need to register it:

Sole Traders need to register with HM Revenue and Customs (HMRC) for self-assessment.
Partnerships also need to register with HMRC.
Limited Companies must register with Companies House and HMRC.

Ensure you also register for VAT if your business turnover exceeds the VAT threshold.

5. Set Up a Business Bank Account

Separating your personal and business finances is crucial for managing your accounts and simplifying tax returns. Choose a business bank account that suits your needs and offers the best benefits.

6. Understand Your Tax Obligations

Understanding your tax obligations is essential to avoid penalties and ensure compliance. As a business owner, you’ll need to manage various taxes, including:

Income Tax (for sole traders and partnerships)
Corporation Tax (for limited companies)
Value Added Tax (VAT)
National Insurance Contributions

Consider consulting with an accountant to help you manage your tax affairs efficiently.

7. Obtain Necessary Licences and Permits

Depending on your business type, you may need specific licences and permits to operate legally. Check with your local authority and the UK Government’s licence finder tool to identify the requirements for your business.

8. Set Up Your Accounting System

Efficient bookkeeping is crucial for tracking your income and expenses, managing cash flow, and preparing for tax filings. Invest in accounting software or hire an accountant to ensure your records are accurate and up-to-date.

9. Create a Strong Online Presence

In today’s digital age, having a robust online presence is vital. Develop a professional website, create social media profiles, and utilise online marketing strategies to reach your target audience. Consider investing in SEO to improve your website’s visibility on search engines.

10. Develop a Marketing Strategy

A well-planned marketing strategy helps you promote your business, attract customers, and generate sales. Identify the most effective channels for your business, such as social media, email marketing, content marketing, or traditional advertising.

11. Network and Build Relationships

Networking is an essential aspect of business growth. Attend industry events, join local business groups, and connect with other entrepreneurs to build valuable relationships. Networking can lead to new opportunities, partnerships, and support from fellow business owners.

12. Monitor and Adjust Your Business Plan

Starting a business is an ongoing process, and it’s important to regularly review and adjust your business plan. Monitor your progress, track your financial performance, and be open to making changes to adapt to market conditions and achieve your business goals.

Conclusion

Starting a business in the UK requires careful planning, research, and execution. By following this step-by-step guide, you can lay a strong foundation for your business and increase your chances of success. Remember, every business is unique, so tailor these steps to suit your specific needs and circumstances. For personalised advice and support, consider consulting with experts at 1 Accounts.

How Can Business Coaching Develop Strong Leaders?

Posted on July 29, 2024 | by Jade Donno

How Can Business Coaching Develop Strong Leaders?

In today’s competitive business environment, strong leadership is more crucial than ever. Leaders not only drive the vision and mission of a company but also inspire and influence their teams to achieve exceptional results. One of the most effective ways to cultivate strong leaders is through business coaching. At 1 Accounts, we understand the transformative power of business coaching and how it can shape the leaders of tomorrow.

The Importance of Business Coaching

Business coaching is a process that involves a professional coach working with individuals to enhance their leadership skills, performance, and personal development. Unlike traditional training programmes, coaching is highly personalised, focusing on the unique needs and goals of each individual. This tailored approach ensures that leaders can develop their strengths, address their weaknesses, and unlock their full potential.

Personalised Development Plans

One of the key benefits of business coaching is the creation of personalised development plans. Coaches work closely with leaders to identify their specific needs and areas for improvement. This could range from enhancing communication skills to developing strategic thinking abilities. By setting clear, achievable goals, coaches help leaders track their progress and stay accountable.

Improved Self-Awareness

A significant aspect of leadership is self-awareness. Understanding one’s strengths and weaknesses is crucial for effective leadership. Business coaching provides leaders with valuable feedback and insights into their behaviour and performance. This increased self-awareness allows leaders to make more informed decisions, improve their interpersonal relationships, and foster a positive work environment.

Enhanced Decision-Making Skills

Effective decision-making is at the heart of strong leadership. Business coaching equips leaders with the tools and techniques to analyse situations more critically and make decisions with confidence. Coaches often use real-life scenarios and case studies to help leaders practise and refine their decision-making skills, ensuring they are prepared for any challenge that comes their way.

Building Resilience

The business world is full of uncertainties and challenges. Strong leaders need to be resilient and adaptable to navigate these complexities successfully. Business coaching helps leaders build resilience by teaching them how to manage stress, stay focused under pressure, and bounce back from setbacks. This resilience benefits not only the leaders themselves but also their teams and the organisation as a whole.

Enhancing Communication Skills

Clear and effective communication is essential for strong leadership. Business coaching helps leaders develop their communication skills, enabling them to convey their vision and expectations clearly and persuasively. Improved communication skills also foster better relationships with team members, stakeholders, and clients, contributing to a more collaborative and productive work environment.

Fostering a Growth Mindset

A growth mindset is the belief that abilities and intelligence can be developed through dedication and hard work. Business coaching instils this mindset in leaders, encouraging them to embrace challenges, learn from failures, and continuously seek improvement. Leaders with a growth mindset are more innovative, motivated, and better equipped to drive their organisations forward.

Conclusion

At 1 Accounts, we believe that business coaching is a powerful tool for developing strong leaders. By providing personalised development plans, improving self-awareness, enhancing decision-making skills, building resilience, and fostering a growth mindset, business coaching helps leaders reach their full potential. Strong leaders are the backbone of any successful organisation, and investing in their development is a crucial step towards achieving long-term success.

Explore our business coaching services and discover how we can help you and your organisation thrive. Visit our website at www.1accounts.co.uk to learn more.

Understanding Your Tax Obligations as a Start-Up: A Beginner’s Guide

Posted on July 26, 2024 | by Jade Donno

Understanding Your Tax Obligations as a Start-Up: A Beginner’s Guide

Starting a new business is an exciting journey filled with opportunities and challenges. One of the most critical aspects to get right from the outset is understanding your tax obligations. This beginner’s guide aims to help you navigate the UK tax system and ensure your start-up complies with all necessary regulations.

1. Registering Your Business

The first step in fulfilling your tax obligations is registering your business with HM Revenue and Customs (HMRC). Depending on your business structure, the registration process will differ:

Sole Trader: Register as self-employed with HMRC.
Partnership: Register the partnership and each partner must register as self-employed.
Limited Company: Register with Companies House and HMRC.

2. Keeping Accurate Records

Maintaining accurate and detailed financial records is crucial for any business. This includes keeping track of all income, expenses, and receipts. Good record-keeping helps in preparing your tax returns and ensures you can provide evidence if HMRC requests it.

3. Understanding Different Taxes

As a start-up, you will encounter various types of taxes. Here’s a brief overview of the main ones:

Income Tax: If you are a sole trader or in a partnership, you will pay income tax on your profits. Ensure you set aside money throughout the year to cover this.
Corporation Tax: Limited companies must pay corporation tax on their profits. This is due nine months and one day after the end of your accounting period.
National Insurance Contributions (NICs): Sole traders, partners, and employers must pay NICs. The amount depends on your earnings and business structure.
Value Added Tax (VAT): If your turnover exceeds the VAT threshold (currently £90,000), you must register for VAT and charge it on your sales.
PAYE (Pay As You Earn): If you employ staff, you need to operate PAYE as part of your payroll. This system collects income tax and NICs from your employees’ wages.

4. Filing Tax Returns

Self-Assessment Tax Return: Sole traders and partners must file an annual self-assessment tax return, usually due by 31 January following the end of the tax year.
Corporation Tax Return: Limited companies must file a corporation tax return (CT600) within 12 months of the end of the accounting period.
VAT Returns: If registered for VAT, you must submit VAT returns, usually quarterly, and pay any VAT due.

5. Claiming Allowable Expenses

To reduce your taxable profit, you can claim allowable business expenses. These include costs like office supplies, travel expenses, and utility bills. Ensure you keep all receipts and records of these expenses.

6. Seeking Professional Help

Navigating tax obligations can be complex, especially for start-ups. Consider seeking advice from a professional accountant or tax advisor. They can help ensure you meet all your obligations, claim all possible deductions, and avoid any penalties.

7. Staying Informed

Tax laws and regulations can change, so it’s essential to stay informed about any updates that may affect your business. Regularly check HMRC’s website or subscribe to their newsletters for the latest information.

Conclusion

Understanding your tax obligations is a fundamental part of running a successful start-up. By registering your business correctly, keeping accurate records, understanding different taxes, and filing timely returns, you can ensure compliance with HMRC regulations. Don’t hesitate to seek professional advice to navigate this complex area confidently. Remember, getting your tax obligations right from the beginning can save you time, money, and stress in the long run.

For more information and professional assistance, visit 1Accounts. We’re here to support you on your entrepreneurial journey.

Common Pitfalls in Succession Planning and How to Avoid Them?

Posted on July 25, 2024 | by Jade Donno

What Are the Common Pitfalls in Succession Planning and How to Avoid Them?

Succession planning is a critical process for ensuring the long-term sustainability and success of any business. However, it is fraught with potential pitfalls that can undermine even the best-laid plans. At 1 Accounts, we understand the intricacies involved in succession planning and are here to help you navigate these challenges. In this blog, we will explore the common pitfalls in succession planning and offer strategies to avoid them.

1. Lack of a Formal Plan

Pitfall: Many businesses fail to create a formal, written succession plan. Relying on informal or verbal agreements can lead to confusion and conflict when it’s time to implement the plan.

Solution: Develop a comprehensive, documented succession plan. This plan should outline the roles and responsibilities of successors, timelines, and the processes for transition. Regularly review and update this plan to ensure it remains relevant.

2. Ignoring Key Roles

Pitfall: Succession planning often focuses only on top leadership roles, neglecting other critical positions within the organisation. This oversight can lead to gaps in essential functions.

Solution: Conduct a thorough assessment to identify all key roles within your organisation. Ensure your succession plan includes strategies for developing and retaining talent for these positions, not just the top-tier leadership.

3. Inadequate Training and Development

Pitfall: Assuming that potential successors will naturally acquire the necessary skills and knowledge can be a costly mistake. Without proper training and development, successors may be ill-prepared to take on their new roles.

Solution: Implement a robust training and development programme tailored to the needs of potential successors. Provide opportunities for them to gain hands-on experience, mentoring, and leadership training.

4. Failing to Engage Stakeholders

Pitfall: Excluding key stakeholders from the succession planning process can lead to resistance and lack of buy-in, which can derail the transition.

Solution: Engage stakeholders early and throughout the succession planning process. Communicate openly about the plans and seek their input and feedback. This inclusive approach can help build support and ensure a smoother transition.

5. Overlooking External Factors

Pitfall: Focusing solely on internal factors and ignoring external influences such as market conditions, industry trends, and regulatory changes can render a succession plan ineffective.

Solution: Regularly conduct external environment scans to identify potential impacts on your business. Incorporate flexibility into your succession plan to adapt to these external changes.

6. Succession Planning as a One-Time Event

Pitfall: Treating succession planning as a one-time event rather than an ongoing process can leave your organisation vulnerable to unforeseen changes and challenges.

Solution: Establish succession planning as a continuous process. Regularly review and update your plan to reflect changes in the organisation and its environment. This ongoing approach ensures that you are always prepared for transitions.

7. Not Considering Cultural Fit

Pitfall: Choosing successors based solely on their skills and experience without considering cultural fit can lead to leadership that is misaligned with the company’s values and vision.

Solution: Evaluate potential successors not only for their technical capabilities but also for their alignment with the company’s culture and values. This holistic approach helps ensure that new leaders will continue to drive the company forward in a manner consistent with its identity.

8. Ignoring Financial Implications

Pitfall: Neglecting the financial aspects of succession planning, such as the costs associated with training, transition, and potential changes in compensation, can strain the organisation’s resources.

Solution: Develop a financial plan that accounts for all aspects of the succession process. This should include budgeting for training and development, transition costs, and any adjustments in compensation for new leaders.

Conclusion

Succession planning is vital for the continuity and success of your business. By recognising and addressing these common pitfalls, you can create a more effective and resilient succession plan. At 1 Accounts, we are committed to helping you navigate this complex process, ensuring your business remains robust and prepared for the future.

The Spring Budget – The Detail

Posted on March 7, 2024 | by Jade Donno

On March 6, 2024, Chancellor Jeremy Hunt delivered a spring budget aimed at boosting public morale and securing voter support, especially important as an election looms and the UK faces economic challenges. This budget focuses on easing financial strains by lowering National Insurance for everyone, tweaking VAT rules for small businesses, and adjusting child benefit charges to support families. Plus, there’s a small break on property sales taxes for some, but no changes to income or inheritance taxes. Let’s explore what these changes could mean for you.

National Insurance Contributions are going down

The first budget announcement was that National Insurance Contributions are again being cut. The government is cutting the main rate of employee National Insurance by 2% from 10% to 8% from 6 April 2024. Combined with the 2% cut announced at Autumn Statement 2023, this will save the average worker on £35,400 over £900 a year.

The government is also cutting a further 2% from the main rate of self-employed National Insurance on top of the 1% cut announced at Autumn Statement 2023. This means that from 6 April 2024 the main rate of Class 4 NICs for the self-employed will now be reduced from 9% to 6%. Combined with the abolition of the requirement to pay Class 2, this will save an average self-employed person on £28,000, around £650 a year.

Following these changes, assessing both salary and dividend options for their tax advantages is advisable. This strategy could optimise your tax position.

The threshold for registering for VAT is going up

The Chancellor raised the VAT registration threshold to £90,000 to alleviate the administrative burden on small businesses and encourage their growth. This change means that smaller businesses can generate more revenue before needing to charge VAT, potentially increasing their competitive edge and allowing them to reinvest savings into their operations. However, businesses approaching this new threshold must plan strategically to manage their growth and VAT responsibilities effectively.

Inflation has rapidly fallen and the economy is picking up

They announced in the budget that Inflation has significantly decreased from 11.1% to 4%, and is expected to reach the 2% target by the second quarter of 2024, according to the OBR. This reduction, occurring faster than previously predicted, indicates a stabilising economy. Last year, the UK experienced minimal growth, indicative of a recession. However, projections show an improvement from early 2024, with the UK predicted to be among the top three fastest-growing G7 economies between 2024-2028. For business owners, this could mean more stable costs, improved consumer spending, and better conditions for growth and investment.

The post-pandemic recovery loan scheme is being extended

The British government has recently updated the Recovery Loan Scheme with an additional funding provision of £200 million, aiming to support the growth and investment plans of small-scale enterprises. To be eligible for this loan, a business must generate no more than £45 million annually, maintain a sustainable model, and be free from immediate financial distress. The Recovery Loan Scheme is also being renamed The Growth Guarantee Fund as announced in the budget.

Full expensing for leased assets is coming

Capital allowances offer businesses an effective strategy to decrease their taxable income. This is achieved by allowing companies to deduct the cost of qualifying purchases such as equipment, machinery, and certain types of business vehicles from their profits, leading to tax savings. This approach not only reduces tax liabilities but also encourages reinvestment in the business. The concept of full expensing enables businesses to apply these capital allowances in the same fiscal year the investment is made. The Chancellor recently hinted that full expensing for leased assets would be implemented when it is financially feasible.

Changes to the Child Benefit Charge

At the moment, there is a situation where a household with 2 parents, each earning £49,000 a year, still gets the full Child Benefit, but those with one parent earning over £50,000 will see some or all of the benefit withdrawn. From 6th April 2024 the point at which child benefit will start to be withdrawn will now be at a higher level of earnings i.e. £60,000 not £50,000. Instead of starting to lose child benefit once at least one parent earns over £50,000 a year, it will be £60,000. It will be taken away entirely from £80,000 a year, rather than £60,000. But more importantly, the government is consulting on moving the system from being based on an individual’s salary to a system based on household income. This new system will come in by April 2026. So watch this space!

Capital Gains Tax on residential properties is being reduced

To address the housing shortage, the government plans to decrease the higher rate of capital gains tax on non-primary residences from 28% to 24% in April. This change aims to encourage more property sales by reducing the tax burden on sellers of investment properties or second homes.

Fuel duty remains the same

The ‘temporary’ 5p cut in fuel duty is being extended for another 12 months.

Alcohol duty remains the same

The alcohol duty freeze is being extended from 1st August to 1st February.

UK ISA

There is a new ISA in town! This ISA gives savers another £5k tax-free allowance, on top of the current £20k that can be subscribed into an ISA. The only restriction is this new UK ISA needs to be invested in British businesses.

A boost for the creative industries

The government is also announcing over £1 billion of new tax reliefs for the UK’s creative industries. This includes introducing a 40% relief from business rates for eligible film studios in England for the next 10 years; introducing a new UK Independent Film Tax Credit; and increasing the rate of tax credit by 5% and removing the 80% cap for visual effects costs in the Audio-Visual Expenditure Credit. A permanent extension will be made to tax relief for theatres, orchestras, museums and galleries.

Changes to the property tax system

The government plans to phase out the Furnished Holiday Lettings tax benefits starting April 6, 2025, and the relief on stamp duty for multiple dwellings beginning June 1, 2024. Properties under contracts exchanged before March 6, 2024—the day before the budget announcement—will still qualify for the multiple dwelling stamp duty relief, regardless of their actual completion date. Additionally, any transactions completing before June 1, 2024, will be eligible for this relief.

Changes to the non-dom tax regime

The tax breaks for non-domiciled residents, people who live in the UK, but not domiciled here for tax purposes have been abolished. Currently, foreign nationals who live here, but are taxed in another country, do not have to pay tax on their foreign income for up to 15 years. From April 2025 this is changing.

For new arrivals, who have a period of 10 years consecutive non-residence, there will be full tax relief for a 4-year period of subsequent UK tax residence on foreign income and gains arising during this 4-year period, during which time this money can be brought to the UK without an additional tax charge.

Existing tax residents, who have been tax residents for fewer than 4 tax years and are eligible for the scheme, will also benefit from the relief until the end of their 4th year of tax residence.

There are transitional arrangements being put in place for existing non-doms.

Smokers and vapers

In Oct 2026 vapers will be taxed more and the tax on cigarettes and tobacco products will go up.

The government is beefing up it’s HMRC team to get more tax in

At first glance, it appears the government isn’t directly investing in increasing HMRC’s frontline workforce. However, it’s channeling an additional £140 million to enhance HMRC’s capacity to handle tax debts. Essentially, this can be seen as an allocation aimed at boosting the identification and collection of outstanding taxes. Now might be a prudent time to consider tax investigation insurance, especially if you haven’t already done so. For those who are clients of 1 Accounts, you’ll be pleased to know this service is already included in our offering!

The recent budget may not have met the expectations of many small businesses, as it offered limited new measures for support. However, as a business owner, there are essential steps to take. Ensure your payroll systems are updated to accommodate the new National Insurance contributions starting April 6, 2024. It’s advisable to start planning now—reach out to us to strategise effectively, particularly regarding the upcoming minimum wage adjustments. Now is also a crucial time for personal tax planning, especially considering the changes to child benefit. Review your pension contributions and, for those operating limited companies, reassess your cash flow in light of these changes and keep your forecasts current. Anticipate additional updates from a potential budget announcement later this year, which could bring more changes.

2024 Spring Budget – The Highlights

Posted on March 7, 2024 | by Jade Donno

Attention Business Owners,

We’ve got the latest scoop on the recent Spring Budget announcement by the chancellor. Buckle up because there’s a lot to unravel, but we’ve got you covered with the need-to-knows.

Let’s dive into the highlights:

National Insurance Contributions Relief

Good news! National Insurance Contributions are getting slashed again. This means more money in your pocket. For employees, the main rate of employee National Insurance is dropping from 10% to 8%, saving the average worker over £900 a year. Self-employed folks are also in luck with a reduction from 9% to 6%.

VAT Threshold

The threshold for VAT registration is climbing up to £90,000. While some debate its impact, it’s aimed at supporting small business growth.

Economic Boost

Inflation is down, and the economy is revving up. With forecasts showing growth on the horizon, it’s a positive sign for businesses.

Recovery Loan Scheme Extension

The post-pandemic recovery loan scheme is extending its support to small businesses with an additional £200 million in funding.

Leased Assets

The chancellor hinted that full expensing for leased assets will come soon, but it’s not clear when, likely when it’s affordable.

Child Benefit

The threshold for the high-income child benefit charge is going up from £50,000 to £60,000. The upper limit for which the benefit is fully removed is also increasing from £60,000 to £80,000. There are also plans in the future to switch this approach from an individual income basis to a household income basis. However, no date has been put on this further change.

Housing and Savings Incentives

Property owners will see a reduction in Capital Gains Tax on residential properties, and there’s a new UK ISA allowing for tax-free investments in British businesses.

Creative Industries Boost

Over £1 billion in tax reliefs are being introduced for the UK’s creative industries, offering support for film studios, independent films, and more.

Now, for the not-so-great news:

Property Tax Changes

The Furnished Holiday Lettings tax regime and multiple dwelling stamp duty relief are on the chopping block.

Non-Dom Tax Regime

Tax breaks for non-domiciled residents are being phased out starting April 2025.

Tobacco and Vaping Tax

Brace yourselves, smokers and vapers, as taxes on these products are set to rise in the coming years.

HMRC and Tax Enforcement

The government is beefing up HMRC’s capabilities to collect more tax, so it’s wise to stay on top of your tax affairs.

In conclusion, while there are some wins and losses in the budget, it’s essential to stay informed and adapt your business strategy accordingly. We’re here to help navigate these changes and ensure your business thrives.

Our Spring Budget Predictions

Posted on March 4, 2024 | by Jade Donno

Simplified Guide for Business Owners: Understanding the Spring Budget Predictions

Attention all business owners! The Spring Budget is set to be announced on March 6th, and it will be aired live on BBC1 at 12pm. This is a crucial event, especially with the general election on the horizon. We anticipate significant announcements that could impact your business, particularly in terms of tax changes and economic growth initiatives. Here’s what you need to know in simple terms.

What is the Budget?

The Budget is a financial statement made by the government every year which outlines its plans for tax changes, spending, and economic strategies. For UK businesses, this means changes in taxes you pay or incentives you might receive.

Predictions for the Upcoming Budget:

1. Inheritance Tax (IHT):

This is the tax paid on an estate (property, money, and possessions) of someone who has passed away. Currently, there are talks that the government might remove this tax entirely, which could be good news for individuals and families.

2. Income Tax Thresholds:

These are limits up to which you don’t have to pay income tax. Since April 2022, there haven’t been changes, but there are whispers that these thresholds might increase. This means you might start paying less tax on your earnings, leaving more money in your pocket.

3. Income Tax Rates:

Following a recent cut in National Insurance, we might also see a reduction in income tax rates. This could further reduce the amount of tax you owe from your earnings, enhancing your take-home pay.

4. Making Tax Digital for Income Tax:

This is a government initiative aimed at making it easier for businesses and individuals to manage their taxes online. Although its launch has been delayed, there might be news on when this will finally kick in.

5. Raising the VAT Threshold:

Currently, businesses with a turnover below £85,000 are exempt from registering for VAT. There’s a possibility this threshold could increase, which could mean fewer tax burdens for small businesses and possibly more room for growth.

Our Hopes for Small Businesses:

We are hoping the Spring Budget will bring good news in the form of tax savings for small businesses. These could come through reductions in various taxes or by raising thresholds that relieve smaller businesses from the complex web of tax obligations. This would not only help businesses grow but also stimulate overall economic growth.

Stay tuned for the budget announcement, and consider how these changes could impact your business.

Is It Time to Electrify Your Double Cab Pickups?

Posted on February 19, 2024 | by Jade Donno

Understanding the Changing Tax Landscape

Current Tax Benefits: A Favorable Position

Double cab pickups are the backbone of the construction industry, serving as both reliable haulers for equipment and convenient transportation for workers and their families. Yet, looming changes in tax regulations could reshape the landscape for these indispensable vehicles.

The Impact of Tax Changes

Currently, double cab pickups enjoy favorable tax treatment, including a standard benefit-in-kind rate set at £3,600, plus £688 for fuel, leading to a tax bill of £857.60 for basic rate taxpayers and £1,715.20 for those in the higher tax bracket. Additionally, companies can fully deduct the cost of these vehicles from their taxable profits thanks to 100% Capital Allowances. However, starting from July 1st, significant tax changes will come into effect, subjecting double cab pickups to similar tax assessments as cars. This shift includes considering CO2 emissions ratings, which could substantially increase taxes and reduce capital allowances.

Navigating Tax Implications: A Case Study

Take, for example, purchasing a Toyota Hilux Active, priced at £34,145 including VAT. Under the current tax regime, there are significant tax savings for both the company and the employee due to VAT recovery and full capital allowances. However, post-change, the tax implications become much more burdensome, with capital allowances reducing to just 6% annually.

Exploring Alternatives: Electrification of Fleet

So, what’s the solution? It might be time to consider electrifying your double cab pickup fleet. Electric vehicles (EVs) are currently treated more favorably in terms of taxation, and although there’s no guarantee, there’s a possibility that future government policies may continue to support EV adoption.

Weighing the Options: Financial and Environmental Considerations

With the impending tax changes, it’s essential to weigh the benefits of purchasing under the existing tax regime against the potential long-term financial and environmental advantages of electric vehicles. While the current rules apply to purchases made before July 1st, 2024, until April 5th, 2028, it’s crucial to consider the broader shift towards electrification and potential changes in legislation that could impact the cost-effectiveness of maintaining a diesel-powered fleet.

Further Guidance and Resources

To dive deeper into the tax implications and allowances, refer to the official guidance at HMRC’s Employment Income Manual.

In Conclusion: A Shift Towards Sustainability

In conclusion, the changing tax landscape suggests that now might be the time to rethink your double cab pickup fleet and consider transitioning to electric vehicles for a more sustainable and financially sound future.

For more detailed information on the tax implications and allowances, please refer to the official guidance at HMRC’s Employment Income Manual.

How to improve your business credit score

Posted on January 26, 2024 | by Jade Donno

Elevate Your Business: A Guide to Improving Your Business Credit Score

Your business credit score is a valuable asset that can significantly impact your company’s financial health and growth potential. Just like a personal credit score, a strong business credit score opens doors to favourable financing options, partnerships, and opportunities. In this comprehensive guide, we explore the importance and provide practical steps to boost it. Plus, discover how 1 Accounts, in partnership with Swoop, can help you on your journey to an improved credit score.

Why does it Matter?

Your business credit score serves as a financial resume for your company. Lenders, suppliers, and partners often use it to assess your creditworthiness. Here’s why it matters:

Access to Financing: A strong credit score makes it easier to secure loans, lines of credit, and other forms of financing, helping you fund growth initiatives or navigate cash flow challenges.
Lower Interest Rates: A high credit score often translates to lower interest rates on loans, saving money over time.
Supplier Relationships: Suppliers may offer more favorable terms and discounts to businesses with good credit, improving your profitability.
Opportunities: Potential partners and clients may view a strong credit score as a sign of reliability and trustworthiness, leading to more opportunities.

Steps to Improve Your Business Credit Score

Establish a Business Entity: Register your business as a separate legal entity (e.g., LLC or Corporation) to separate personal and business finances.
Open a Business Bank Account: Use a dedicated business bank account for all financial transactions to establish financial stability.
Apply for a Business Credit Card: A business credit card can help build credit when used responsibly.
Pay Bills on Time: Consistently pay bills, loans, and credit card balances on time to demonstrate financial responsibility.
Monitor Your Credit Report: Regularly check your business credit report for errors and discrepancies. Dispute inaccuracies promptly.
Maintain Low Credit Utilisation: Keep your credit utilization (credit used vs. credit available) low to show responsible credit management.
Diversify Credit Types: Utilise a mix of credit types, such as installment loans and revolving credit, to show credit diversity.
Avoid Overextending: Be cautious when taking on new credit, and only borrow what your business can comfortably repay.

Unlock Your Business’s Potential

A strong business credit score is an asset that can open doors to financial stability and growth opportunities. By following the steps outlined in this guide and leveraging the expertise of 1 Accounts and Swoop, you can enhance your creditworthiness and position your business for success